In the last post I talked about making low offers, but I didn’t emphasize that you should be making at least one formal written offer every day, 7 days a week, 365 days a year. Where people go wrong is to make an offer, then to sit back and wait for a reply before making another offer. This has a paralyzing effect on the buyer.
With only one offer floating around out there, the buyer who is waiting for a response, instead of making repeated offers to many sellers, has too much time and emotion tied up in the offer, and thus, is more willing to offer more money at higher prices when receiving a counter offer. On the other hand, when a buyer has a dozen offers out there, and is continuing to make more money every day, he can play the numbers game. How does this work?
Be practical; there are only so many houses you can buy even at today’s bargain basement prices. So it’s not as important to be able to buy a house as it is to be able to buy a house at rock bottom prices and on terms you can afford. If all you had to do was to plug in the sellers’ names, the address of the house (legal description to be provided prior to closing by seller), the price you’ll pay, subject to any financing, and the terms; you can make multiple offers without much effort. Brokers don’t much like this, but with a little effort, you’ll be able to find a Broker who will make your low offers.
One person I know buys a house every couple of weeks at between $50 and $70 per square foot, (without regard to lot value), makes 6-8 offers EVERY DAY. He can mark them up $20 or so per square foot and sell them at about 75% of MLS values to bargain hunting buyers. Do the math: If a $1500 square foot house in good condition with need for very little repair can be bought for about $80,000 from a lender, it can usually be marked up to $119,900 and sold after 91 days to an owner occupant with FHA financing. If MLS comparables were about $100 per square foot, the buyer would be tickled to death and have little problem getting loan approval.
Check out MLS and foreclosure values in your area, and you’ll probably see similar figures. All you’ve got to do to play in this game is to raise the cash. Next post, we’ll cover that.
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